Agriculture scams that shook India


In the nascent stages of Indian independence, agricultural scams were few and far between but the post-90s witnessed a surfeit of such rackets whose gravity and magnitude took the country by surprise. Ritika Singh believes that robust checks and administrative reforms can insulate agriculture economy from such frauds.

There’s no denying that agriculture is the largest and one of the most important sectors in the Indian economy. According to Indian Brand Equity Foundation (EBEF), agriculture is the primary source of livelihood for about 58 per cent of India’s population.

In Financial Year-20 (PE) the Gross Value Added (GVA) by agriculture, forestry and fishing was estimated at ₹ 19.48 lakh crore (US$ 276.37 billion) in FY 20 (PE) as per IBEF. And, the growth in GVA in agriculture and allied sectors was four per cent in the same financial year.

That of agriculture, forestry and fishing, as per IBEF, is likely to be three per cent in the second quarter of FY 21. The trust established by the Department of Commerce, Ministry of Commerce and Industry, Government of India further reported that Essential Agricultural Commodities export for the April-September period of 2020 increased by 43 per cent to ₹ 53,626 crore (US$ 7.3 billion) over ₹ 37,397 crore (US$ 5.1 billion) in the same period last year.

After achieving Independence, the newly-free India started witnessing scams and scandals of varying scales hurting the country’s adolescent economy and the infrastructure. It was only in the 90s that the first agriculture scam, the Fodder Scam, hit the country and the sheer scale of the scam took everyone by surprise. In the years to follow, there were many more such as the Palmolein Oil Import Scam, Sugar import scam, Fertiliser import scam, Orissa paddy scam, Madhya Pradesh wheat-procurement scam, etc.

Fodder scam embezzled in billions

One of the first agriculture scams that made national headlines was the Fodder Scam, a corruption scandal that was revealed in 1996 and involved embezzlement close to ₹ 950 crore then. It was in January 1996 that the premier investigating agency in India, Central Bureau of Investigation (CBI) raided offices of Animal Husbandry department in Chaibasa and unearthed the scam and implicated Bihar’s then Chief Minister Lalu Prasad Yadav.

The scam included large-scale embezzlement of the government’s treasury funds for the purchase and supply of cattle fodder in Bihar in the 90s that were put in non-existent companies. In addition to the then CM Lalu Prasad Yadav, former CM Jagannath Mishra was also implicated in the scam too that eventually forced Lalu Yadav to resign from the office. However, he appointed his wife Rabri Devi to the office in his stead.

The scam initially started with smaller misappropriation of funds by government employees at the local level. In time, the scam engulfed businessmen and politicians that also led to the increase in the amount of funds embezzled. It was then Comptroller and Auditor General of India TN Chaturvedi who noticed irregularities in the Bihar treasury in 1985. He found delays in the submission of monthly accounts of the state treasury and indicated towards possible laundering of state funds.

Politicians, businessmen nexus

The Animal Husbandry department had made fraudulent withdrawals to the account of ₹ 1,000 crore under the medicines tab when Lalu Prasad was the Chief Minister.

Former CM Mishra who served the state in the 70s was the earliest politician known to be involved in the scam. The scandal surfaced in 1996 but had been in progress over the last two decades and later investigations revealed a dark nexus of politicians, bureaucrats and businessmen that led to the scam going undetected for so long.

CBI filed chargesheets against Lalu Yadav and 55 co-accused in June 1997 where cases were registered under IPC Section 420 (forgery) and 120 (b) (criminal conspiracy) and Section 13 (b) of the Prevention of Corruption Act. A case of Disproportionate Assets was registered against Lalu Yadav in 1998 along with wife Rabri Devi as a co-accused. In a judgment in 2013 by Patna CBI Court, Lalu Yadav was convicted and barred from contesting any elections for 11 years.

Paddy crop misappropriated

In 2009, a Right to Information (RTI) activist in Odisha’s Nuapada district unearthed a scam where rice millers colluded with government officials to fake transactions and in the process make money by selling highly subsidised rice back to the government at much higher rates. So, subsidised rice from the Public Distribution System (PDS) sold at ₹ two per kg was sold to the government at ₹ 17 per kg. The RTI activist became suspicious when the records revealed government buying 77,000 quintals of paddy from Nuapada in 2008 while a harsh drought had destroyed most of the crop that season.

In Punjab in 2012, a case was registered against the son of a senior Akali leader and some officials of Punjab Markfed — one of Asia’s largest marketing cooperative federation–for their involvement in a paddy scam worth crores.
Replying to an RTI application, Markfed had revealed embezzlement of paddy stocks by rice sheller owners to the tune of 62 crore in Moga, Jalandhar, Faridkot, Gurdaspur and Muktsar districts of Punjab.

It was when the rice mill didn’t hand over milled rice to Markfed on time that authorities grew suspicious. Senior officials of the department had inspected the rice mill in January 2012 and found that the paddy procured by the agency during 2010-2011 and given for milling was missing from the mill according to Markfed District Manager HS Dhaliwal.

Urea Scam involved top brass

In 2018 a special CBI court in Delhi imposed a ₹ 100 crore penalty on two Turkish nationals, both former executives of Karsan Ltd, in the decades-old urea scam case. This happens to be one of the highest penalties in a corruption case. The duo was also sentenced to six years of rigorous imprisonment. Two former senior officials of the National Fertilizer Limited (NFL) were sentenced to three years’ rigorous imprisonment and fined ₹ 6 lakh each for their involvement in the scam. Former Prime Minister Narasimha Rao’s nephew and an accused in the case B. Sanjeeva Rao were sentenced to three years’ rigorous imprisonment with a fine of ₹ 5 crore.

In 1995, National Fertilisers Limited (NFL) had floated a global tender for the procurement of 2,00,000 metric tonnes of urea. Under CMD CK Ramakrishnan, the NFL paid the entire amount of ₹ 133 crore in advance to Karsan Ltd. without any bank guarantee.The company took the money but never delivered the urea to NFL. The CBI had registered the urea scam case on allegations that the accused entered into criminal conspiracy and cheated NFL to the tune of ₹ 133 crores where laundering took place through hawala channels. Son of former fertilisers minister Ram Lakhan Singh Yadav, Prakash Yadav was also an accused.

Most recently, the economic offences wing (EOW) of the Madhya Pradesh government initiated an inquiry into scam involving horticulture and food processing department officers. There have been alleged irregularities in the purchase of agriculture implements under the Mechanisation Scheme of the central government in past eight years.
The department officers allegedly ‘cleared the bills related to purchase of sub-standard machines at much higher rate than the market rate but also transferred the amount of grant to dealers of implements instead of depositing the same in the beneficiary farmers’ bank accounts through direct benefit transfer (DBT).’ Owing to the scale and reach of the sector, agriculture is more prone to scams and corruption. Robust checks and administrative reforms will go a long way in curbing such scams.

Ritika Singh

Ritika Singh is a legal researcher with – an initiative of DraftCraft International to protect and empower women by bringing on one platform the latest on rights and issues, strategic case studies, state initiatives and informed legal opinions